What is Whole Life Insurance?
Whole life insurance is a kind of permanent policy that provides a life insurance benefit for one’s whole life with the options to pay premiums for only couple years, 7 years, 10 years, 15 years or right up to your retirement with a guaranteed life time of protection. Whole life also offers guaranteed cash value (like equity in your house) inside the policy with a very attractive dividend rate of return. The cash value inside the whole life policy grows tax-deferred and can be taken out anytime tax-free through a cost basis withdrawal and/or as a loan for any purpose.
Who is Best Suited for a Whole Life Policy?
Anyone from age 1 month up to age 65 who is looking for a permanent protection and an attractive savings vehicle is best suited for a whole life policy. After one reaches age 65 they may be better suited with a guaranteed universal life policy for only permanent protection needs if they are looking for cash value accumulation.
What are The Benefits of Whole Life Insurance?
- It provides lifelong death benefit
- You don’t have to pay premiums for your entire life. You can finish premium payments in as little as few years without losing any tax advantages
- Cash values inside the policy grow tax-deferred (NO 1099 form EVERY YEAR – as you get from your Bank)
- You can take out cash value any time tax-free through a cost basis withdrawal and/or loan distribution strategy
- Your cash value is protected from litigation and lawsuits
- Cash value is invisible inside your whole life plan for financial aid applications for college
- With a “Waiver of Premium” rider your premium will be waived up to you reach age 65 if you become totally disabled
- NO STOCK MARKET INVESTMENT RISK in whole life plan
- Very attractive NET Rate of Return compared to bank, bonds or fixed income securities or stock market returns
- No limitations on contributions when you compared to a Roth IRA and Roth 401K
- Whole Life is the only policy that provides THREE guarantees – Guarantee of cash value, Guarantee of premium will not increase and a Guarantee of original death benefits will not decrease. No other kind of policy provides these three guarantees.
Are There Any Cons to Whole Life Insurance?
Yes, but very few …
- You need to be in a good health to qualify for it and to achieve an attractive rate of return
- It takes time to grow your cash value – It’s a long term savings vehicle
How Much Whole Life Insurance Should You Get?
Based on the above benefits, there is no other savings or investment vehicle available that can offer similar benefits of a whole life policy. So you should get as much as you can get approved for by the insurance company (normally companies approve between 10 to 20 times your income) or as much as you afford to pay premiums for.
Technically, there are two methods to calculate how much Life Insurance you need to protect your family.
First, there is the Human Life Value, where you multiply your annual income by the number of years you have left to work. (Example: John is 45 years old, plans to retire at age 65 and earns $250,000 per year, in order to protect his family, he should have at least $5,000,000 ($250,000 x 20 years) in coverage.
The second method is the Needs Based planning method, where you calculate your monthly expenses and future needs, such as your children’s education and any mortgage or loan payments and purchase coverage based on that amount.
What is The Next Step?
It’s very simple. Please call (877) 972-3262 to speak with our expert advisor or complete our whole life insurance quote request form now. We’ll take care of the rest. We’ll compare top companies and find the best policy for you.
Permanent life insurance policies like whole life insurance policy have a component of investment built into it. This type of plan can become the ideal life insurance investment vehicle for you. At BeamaLife, we offer such policies to people who are inclined to creating wealth but with complete protection of life.
One of the attractions of investment in this coverage is that it allows building guaranteed cash value that you can use while you are alive and pass it on as a financial legacy to your heirs. Another attraction is that you need not pay any tax on the growth of investment if you withdraw it via loan strategy.
The terms of the premium are flexible as you can choose from different plans ranging from seven years, ten years and 15 years. You can also continue to pay the premium for as long as you want.
The investment in insurance is relatively risk-free as the benefits are assured in the form of guaranteed cash value that attracts good dividend rate when you get it back. When compared to stock market returns, fixed income securities, bonds and bank savings, the whole life insurance rate of return is much better.
From the investment angle, you get the guarantee of whole life insurance return. There are other two guarantees such as the death benefit remains the same as agreed and the premium that you pay remains fixed, and it will never increase.
At BeamaLife, we explain to our clients that the fundamental purpose of life insurance is to assign a value to your life and protect it. The investment feature is an added attraction. If you choose life insurance as investment vehicle, then you must be ready to wait for some time to make money grow.
Insurance companies usually approve a cover equivalent to anything between 10 and 20 times your earnings. How much you can afford is a matter of personal financial planning. However, it is advisable that you take a coverage to the maximum extent possible because the benefits are significant.
People belonging to the high-income group often go for this insurance. Those who have used up all options of IRA, Roth IRA, and 401(k) plans, may consider whole life insurance returns as it makes good sense, especially if they do not have any insurance coverage.
Get in touch with us for more information about life coverage options. If you have made up your mind about buying whole life insurance policy, send in the request form asking for a quote.